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University Fees and employment taxes

An employee would like to do a post graduate degree, we would like to pay some or all of the fees

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An employee has expressed an interest in doing a post graduate degree in a subject directly related to the work they do for us.  We would like to retain them particulary in the short term and are looking at the tax implications of the options available.

There is a tax and NI exemption of if we were to pay the cost of their fees while they studied full-time.  So one option might be to ask them to defer a year, then we could pay some or all of the fees the following year.  

Preferrable would be for them to study part time and work part time, is it possible for the university fees to be paid before tax and NI in this situation?

If we were not going to pay the full amount of the fees, would it be plausible to involve salary sacrifice so they could top up the contribution?

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By paul.benny
15th May 2020 11:08

All work-related training is exempt from tax - see EIM 01210 and following. There is no obvious reason why the study you mention should be outside the scope.

Salary sacrifice arrangements are limited to a few narrow categories - pensions, cycle to work and legacy childcare vouchers. Anything else still requires you to account for PAYE and NI.

Note you can also cover the cost of travel and study materials.

You might also want to consider some kind of lock in to protect your investment.

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By Simpleton2
15th May 2020 11:32

Thanks, I will look into what you said.

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